Competition Authority Notification - Burmah Castrol (Ireland) Ltd / Motor Fuels Equipment Loan Agreements
Decision No. 555
Competition - Standard loan agreement - Product market in lubricants additives and brake fluids - Agreement between Burmah Castrol (Ireland) Ltd and commercial customers for loan of equipment - Equipment to be used exclusively for products supplied by Castrol - Period of exclusivity five years - No requirement on customers to purchase all lubricant requirements from Castrol - Whether agreement has object or effect of restricting or distorting competition - Competition Act 1991.
Competition Authority decision No 555 delivered 27 May 1999.
The agreement in this notification does not offend s. 4 of the Competition Act 1991 as the agreement does not contain any provision preventing or penalising distributors from dealing with competitors of Castrol. Further, there are five substantial national competitors with Castrol in the market and the equipment which is subject to the agreements is widely available. The Competition Authority so held in issuing a certificate.
Notification was made of a standard agreement between Burmah Castrol (Ireland) Ltd., now called Castrol (Ireland) Ltd. (“Castrol”) and its customers of lubricant products for the loan of certain equipment. Castrol requested a certificate under Section 4 (4) of the Competition Act, 1991 or, in the event of a refusal by the Competition Authority to issue a certificate, a licence under Section 4 (2).
(b) The Subject of the Notification
2. This notification concerns a standard agreement between Castrol and its commercial customers for the loan of equipment for use by the customer with Castrol branded lubricants.
(c) The Parties Involved
3. Castrol is an Irish registered company engaged in importation and distribution in the State of various petroleum products. It is a subsidiary of Castrol Limited, a company registered in the UK.
4. The customers with whom the arrangements are entered into are commercial customers of petroleum products. They may be commercial users or undertakings reselling the product to such users or, to a lesser extent, retailers. These arrangements are not entered into with retailers.
(d) The Product and the Market
5. The relevant product market for these notifications is lubricants, additives and brake fluids (collectively referred to as “lubricants”).
6. The Authority has considered the broader motor fuels market in a number of decisions including: Irish National Petroleum Corporation Ltd/Purchasers of Petroleum, Decision No. 487, and Burmah Castrol (Ireland) Limited, Decision No. 507. Those decisions indicate that in the motor fuels market, Castrol has less than a5%market share in any product market and less than 5%of the existing retail outlets. This market in Ireland is dominated by large integrated multinational companies such as Esso, Shell, Texaco and Statoil.
7. Here, the product market is limited to lubricants. In Ireland, lubricants are sold both through retail channels (which include petrol stations) as well as through commercial
distribution channels. The Authority has examined the lubricants market previously in Burmah Castrol (Ireland) Ltd., Decision No. 361.
8. Unlike the motor fuels market, there is no publicly available information on market shares in the lubricants market updating the information contained in Decision No. 361. The Authority has confirmed that the market leaders in the motor fuels market are all active in the lubricants market and that lubricants are available throughout the State in a large number of retail outlets. We also have confirmed that Castrol have less than 25% of the market for lubricants in the State.
(e) The Notified Arrangements
9. The notified agreement is a standard agreement between Castrol and its commercial customer whereby Castrol supplies equipment on loan to the customer for the dispensing of lubricants. The equipment includes heavy duty oil reels, pumps, meters and ancillary pipework and fittings.
10. The notified agreement contains a provision at Section 4 for the equipment to be used exclusively for products supplied by Castrol. The period of exclusivity is five years. After that period, the agreement provides for the commercial customer to purchase the equipment from Castrol at its written down value, which at the end of five years, provided that the customer has made all payments due under the agreement, is nil. Unlike agreements...
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